MOD Awards £800m Contract For Submarine Propulsion Programme

13/02/2013

The MOD has awarded an £800M contract to enable the nuclear submarine industry deliver vital UK defence capability. Under the ten-year contract, which will help sustain around 2,000 jobs across the UK, Rolls-Royce will deliver and maintain the UK’s nuclear propulsion capability, which is the power source for the Royal Navy’s Astute and future Successor deterrent submarines.

Part of the Submarine Enterprise Performance Programme (SEPP), this contract will also help the company to transform its operations to carry out its work at best value for the taxpayer.

By consolidating costs into one agreement, the MOD and Rolls-Royce expect to make savings of around £200M over the next decade.

This contract goes a long way towards meeting the Government’s commitment to the SEPP as announced in the 2010 Strategic Defence and Security Review, to make at least £900M of savings by restructuring the UK’s nuclear submarine industry.

Productive negotiations between MOD and Rolls-Royce mean the savings secured by this contract will not lead to any reduction in the required level of output for the submarine programme, which includes the production of the propulsion systems for the Astute and next generation Successor classes of submarines.

Minister for Defence Equipment, Support and Technology Philip Dunne said:

“This contract provides the company with long-term certainty and stability which will help sustain around 2,000 jobs, whilst also providing a better deal for the taxpayer and ensuring our future plans remain affordable.

“By making sure the submarine industry is aligned to the needs of the MOD we are able to press on with the Astute and Successor submarine programmes safe in the knowledge that the value of our significant investment is being maximised.”

Mr Dunne added:

“Rolls-Royce work in the production of submarine propulsion systems is an important national strategic capability.

"It is necessary in order to meet the present and future defence and security needs of theUK and this contract ensures the MOD can continue to benefit from this unique capability on the best possible business terms.”

Contracts to deliver further savings with BAE Systems Maritime Submarines and Babcock Marine are expected to be announced in due course.

This contract provides the company with long-term certainty and stability which will help sustain around 2,000 jobs, whilst also providing a better deal for the taxpayer and ensuring our future plans remain affordable.